Country-Level Institutions and Transparency of Directors’ Information Disclosure: The Role of the Labor Market

This study investigates whether country-level institutions related to the labor market affect firms’ disclosure of information about their directors. Our findings, based on a sample of public companies domiciled in 46 countries, show that the level of disclosure of directors’ information, particularly information on their remuneration, is lower for firms in countries with better developed labor markets. We further find that in countries with more stringent labor regulations, firms are less likely to disclose both directors’ remuneration and biographical information. Firms in countries with better labor systems (e.g. greater mobility in the labor market and more effective social dialogue) make more such disclosures. Overall, our findings suggest that better developed country-level institutions related to the labor market disincentivize firms from disclosing information about directors. However, different types of country-level institutions have different impacts on firms’ incentives to make such disclosures. Our study provides valuable insights into how labor market development affects the alignment of boards’ incentives with those of stakeholders such as employees and how external pressure from employees affects a firm’s strategic actions regarding disclosing directors’ information.